Opinion: YouTube's Twitch acquisition rife with peril and possibilities

[Originally posted May 21, 2014]

Over the weekend, reports began to surface from Variety about how YouTube, a subsidiary of Google, has plans to invest more than $1 billion to acquire the game-streaming service Twitch. The talks are ongoing, and nothing has been formally announced, but already gamers and industry-watchers alike are wondering: what would this mean?

On its face, a YouTube acquisition makes a lot of sense. YouTube offers its own live streaming service for events, and Twitch is an established brand with the infrastructure to support game streaming. It's a ready-made match between two companies that just clicks. That may be why, according to The Verge, Twitch is not only accepting the YouTube offer, but passed on other courters like Microsoft.

Not only that, but Twitch should be a compelling get for Google and YouTube. According to investment site The Motley Fool, Twitch ranked fourth in peak Internet traffic in February. Only Netflix, Google, and Apple finished ahead of it, so acquiring the service draws in another top-trafficked site with a passionate and existing base of current users.

However, not everyone is enthusiastic. As members of that existing base, current Twitch fans have some reasonable concerns. The acquisition could spell big changes for how we enjoy streaming game footage. As with any big move, this acquisition comes with opportunities and drawbacks. At its core, judging the outcome will depend largely on just how much autonomy Twitch is allowed after the transition sets in.

Foremost among these potential drawbacks are the ads. At its core, Google is an advertising company. It may be best known for its search engine, but it successfully monetized that business with targeted ads based on search results. While Twitch uses ads and subscriptions to generate revenue, the ads on YouTube are noticeably more onerous. Between pre-roll, mid-roll for longer videos, and pop-ups at the bottom, Google has found a whole host of ways to generate revenue, each of which gets in the way of content. That's understandable--it is a company hosting absurd amounts of data for free, after all--but one has to wonder if Twitch will become just as cluttered if the deal goes through.

That also raises the question of how ads will be handled during lengthy live events. YouTube tends to interrupt longer videos with mid-roll ads, at fairly random moments. Twitch sometimes uses mid-roll ads, but its business is largely based around live viewing. That makes the possibility of increased mid-roll ads difficult to place properly, and creates the potential for viewers to miss out on great moments. Again, Google's influence could mark a sea change in how we're accustomed to consuming events.

Even more problematic could be the expansion of Google's existing issues with copyright. In an apparent move to placate copyright holders, YouTube's reporting system is automated to the point of easily abused. We've already seen some game companies give tone-deaf responses to the advent of streaming. Publishers seem to be playing it smarter now, no longer rejecting what is essentially free promotion. But if Google's policies and enforcement mechanisms take hold at Twitch, they'll be forced to kowtow to any publishers who are behind the times.

That's certainly not to say that such an acquisition is all doom and gloom. Google is a massive company, and with that investment would come resources to expand Twitch's capabilities. Just as the drawbacks are largely based on Google inserting itself into Twitch's operations, the benefits come down to Twitch continuing business as usual with a new injection of funds. Whatever plans Twitch may have been sitting on for the right opportunity, such an investment could spur it on.

And while some concerns are certainly valid, we can safely rule out a few common fears. Twitch likely won't be folded into YouTube. Such a move would signal that YouTube is interested in the technology instead of the brand, and Twitch's traffic gives the company ample reason to maintain both as they already are. The possibility of Google's rivalry with Microsoft motivating them to pull the Xbox One functionality is remote. Twitch is a service, after all, and the more eyeballs on it the better. The rivalry hasn't stifled the YouTube application on Xbox systems, so there's little reason to think it would happen here.

The reports seem too specific at this point for the deal to fall through, unless something wildly unexpected happens, so we'll probably see an announcement soon enough. Once we know the terms, we can better anticipate any changes. For the time being, the reported deal is rife with potential benefits and disadvantages. If Twitch keeps its independence, we can gladly welcome our new Google overlords. The real danger here is that the massive company will begin meddling.